Passport System for Securities Regulation Must Evolve into Single Regulator, Business Leaders Say

September 30, 2004

The CCCE, which is composed of the chief executives of 150 leading Canadian enterprises, believes that a single regulator ultimately is the only approach that can deliver on the provinces’ stated goal of inspiring investor confidence and supporting competitiveness, innovation and growth through efficient, streamlined and cost-effective regulation.

“It is critical for provincial governments to recognize this passport agreement as a beginning and not as an end,” said Gwyn Morgan, Vice-Chairman of the CCCE and President and Chief Executive Officer of Alberta-based EnCana Corporation.

Mr. Morgan urged provincial ministers to keep working together to develop a united Canadian solution that would maximize the competitive position of Canadian companies.  “EnCana, like many other Canadian companies, must be able to attract investors in Canada, the United States and globally on a level playing field with our United States competitors.  Being subject to regulation on both sides of the border is enough of a complexity, but the fragmented Canadian situation only makes matters worse, and the agreement signed today will not resolve the most important issues.”

Under a passport system, participating provinces recognize each others’ rules but keep their separate securities commissions in place.  This is intended to simplify access for companies, dealers and investors by enabling each to deal only with the regulator in their home jurisdiction.  In practice, however, the Memorandum of Understanding (MOU) signed by participating provinces today will perpetuate inconsistent interpretation and enforcement, maintain excessive costs and prevent Canadian rules from adapting quickly, said CCCE Executive Vice President David Stewart-Patterson.

“It is obvious why Ontario, where the vast majority of the country’s market activity takes place, is unwilling to sign the MOU at this time,” Mr. Stewart-Patterson said.  “For this passport system to be credible, provincial governments must commit themselves to building on this base and to working together in good faith to develop a model for a single regulator that will meet the needs of Canadian companies and investors from coast to coast.”

The CCCE recognizes the need for Canada’s rules to reflect a diverse marketplace in which most public companies are small.  “While ensuring comparable treatment of large issuers that are cross-listed in the United States, Canada’s regulatory approach should include distinctive features that will help Canadian companies of all sizes to attract investment and to grow,” Mr. Stewart-Patterson said.

“At a time when government budgets are being squeezed by rising demand for public services such as health care, decisive action on regulatory solutions would boost Canada’s competitiveness without adding to the burden on taxpayers,” Mr. Stewart-Patterson said. “There is a real opportunity here for provincial leaders to take the next step and show Canadians that they are capable of working together to deliver innovative solutions to challenges that face Canada as a whole.”

The CCCE is a non-partisan organization with an outstanding record of achievement in matching entrepreneurial initiative with sound public policy choices. Member CEOs lead companies that collectively administer in excess of $2.3 trillion in assets, have annual revenues of close to $600 billion and account for a significant majority of Canada’s private sector investment, exports, training and research and development.

In addition to Mr. Morgan, the members of the CCCE’s Executive Committee are: Chairman Richard L. George, President and Chief Executive Officer of Suncor Energy Inc.; President and Chief Executive Thomas d’Aquino; Honorary Chairman A. Charles Baillie; and Vice-Chairmen Dominic D’Alessandro, Paul Desmarais, Jr., Jacques Lamarre and Gordon Nixon, the chief executives respectively of Manulife Financial, Power Corporation of Canada, SNC-LAVALIN Group Inc. and Royal Bank of Canada.